Energy Investments Global Ltd v Albion Energy Ltd

• Jurisdiction: Jersey
• Court: Court of Appeal
• Judge: Bailhache JA
• Judgment Date: 14 December 2020
• Neutral Citation: [2020] JCA 258
• Date: 14 December 2020

[2020] JCA 258

COURT OF APPEAL

Before:

James McNeil, Q.C;

Sir William Bailhache and Jeremy Storey, Q.C.

Between

(1) Energy Investments Global Limited

(2) Heritage Oil Limited

Appellants

and

Albion Energy Limited

Respondent

Advocate D. M. Cadin for the Appellants.

Advocate A. D. Hoy for the Respondent.

Authorities

Albion Energy Limited v Energy Investments Global Limited and Heritage Oil Limited [2020] JRC 147A.

Albion Energy Limited v Energy Investments Global BRL [2020] EWHC 301 (Comm)

Drake v Mitchell [1803] 3 East.252

Ex Parte Fewings [1883] Chancery Division Vol XXV 338 CA

Zavarco Plc v Nasir [2020] EWHC 629 (Ch)

Virgin Atlantic Airways Ltd v Zodiac Seats UK Limited [2013] UKSC 46 [2014] AC 160

Royal Court in Doorstop Ltd v Gillman [2012] (2) JLR 297

Dicey, Morris and Collins on the Conflict of Laws 15th Edition volume 1

Carl Zeiss Stiftung v Rayner and Keeler Limited (No 2) [1967] 1 AC 853 HL

Re Internine Trust [2005] JLR 236

Trilogy Management Limited v YT Charitable Foundation (International) Limited and Others [2012] JCA 152

Trico Limited v Buckingham [2020] JCA 067

Pothier Traite des Obligations (1821 Edition)

Cox v Troy [1822] JB & Ald 474

Caledonia North Sea Ltd v London Bridge Engineering Ltd (the “Piper Alpha” litigation) [2000] SLT 1123

Re Imacu [1989] JLR 17

Evidence (Proceedings in Other Jurisdictions) Act 1975

The Mecca [1897] AC 286 HL

Le Gros, Traité du Droit Coutumier de l'Isle de Jersey (1943)

Remise de biens of Super Seconds Limited [1996] JLR 117

Dessain and Wilkins, Jersey Insolvency and Asset Tracking, 5th ed.

Companies — appeal against two orders of the Royal Court.

Bailhache JA

Introduction

1 This the judgment of the Court on an appeal against two Orders of the Royal Court that:-

We adopt the same definitions in this judgment as were adopted in the court below.

• (i) The First Appellant shall transfer 19,249,664 shares in the Second Appellant into the name of the Respondent; and

• (ii) The Second Appellant shall register the transfer of those shares in its Register of Members and issue a Certificate of Title to reflect that entry and deliver the same to the Respondent.

2 The judgment of the Royal Court (Clyde-Smith, Commissioner sitting with Jurats Blampied and Thomas) is to be found at Albion Energy Limited v Energy Investments Global Limited and Heritage Oil Limited [2020] JRC 147A, and was handed down on 30 ^th July, 2020. The Orders were made by the Royal Court at the Respondent's request to enable the Respondent to enforce its security over shares in the Second Appellant.

3 As was indicated by the Royal Court, the background is well set out in the judgment of Foxton J in Albion Energy Limited v Energy Investments Global BRL [2020] EWHC 301 (Comm) whose wording was substantially adopted by the Royal Court in its judgment, extracts of which appear below:-

“3. Heritage Oil was founded by Mr Anthony L R Buckingham and is an oil production and exploration company incorporated in Jersey. It was listed on the London Stock Exchange. In 2014, EIGL, a BVI incorporated company beneficially owned by Sheikh Hamad, the former Prime Minister of Qatar, acquired 80% of the share capital of Heritage Oil and took the company private. The other 20% remained controlled by Albion, a Guernsey incorporated company, beneficially owned by Mr Buckingham .

4. On 31st January 2018, Albion sold its remaining 20% interest in Heritage Oil to EIGL on the terms of a share purchase agreement (“the SPA”) governed by English Law, for the sum of US $100 million payable in three instalments. There were six parties to the SPA, which contained other provisions beyond the sale transaction. In addition to Albion and EIGL, the other parties were Heritage Oil, Mr Buckingham, a company called Albion Resources Limited and a company called Sundance Investments Limited .

5. The first two instalments under the SPA were paid by EIGL. However, shortly before the final instalment became due on 20th December 2018, Macfarlanes LLP, on behalf of Heritage Oil, wrote to Albion on 14th December 2018 asserting claims against Mr Buckingham. By a second letter of the same date, Macfarlanes LLP wrote to Albion on behalf of EIGL, saying that in view of Heritage Oil's claims against Mr Buckingham, EIGL intended to withhold payment of the outstanding amount payable under the SPA. There was no suggestion at that stage that the matters raised in Macfarlanes LLP's correspondence gave EIGL its own claim against Albion .

6. On 15th December 2018, Charles Fussell & Co LLP, the English Solicitors acting for Albion, pointed out that any claims which Heritage Oil might claim to have could not provide a legitimate reason for EIGL to withhold the final instalment of the purchase price due to Albion. In response, on 17th December 2018, Macfarlanes LLP suggested for the first time that the matters raised were capable of supporting a petition for unfair prejudice, which could give EIGL a claim against Albion .

7. Solicitors' correspondence followed in which EIGL agreed to pay US $20 million of the outstanding instalment unconditionally, with the remaining US $13.3 million to be held by Charles Fussell & Co LLP on the terms of an escrow agreement dated 22nd January 2019 (“the Escrow Agreement”) .

8. Albion subsequently brought proceedings in the High Court against EIGL and sought summary judgment for the outstanding amount of US $13.3 million. In response, EIGL sought a stay of proceedings relying for this purpose on the arbitration clause in the Escrow Agreement. Alternatively, EIGL contended that Albion was not entitled to summary judgment, because it had a defence with a realistic prospect of success, namely an equitable set-off arising from EIGL's claim for relief for unfair prejudice against Albion. EIGL also contended that the proceedings should be stayed under the inherent jurisdiction of the English Court, pending the determination of EIGL's unfair prejudice claim proceedings to be commenced in Jersey

…… ..

…… .

Security

12. The purchase consideration of US $100 million was secured over the 20% of the shares in Heritage Oil, namely 57,748,991 ordinary shares of no par value, that were sold to EIGL and this pursuant to a Security Interest Agreement dated 31st January 2018 (“the SIA”), which is governed by Jersey Law .

……

Albion's application

29. On 23rd March 2020, Albion exercised its powers under the power of attorney in the SIA to execute a stock transfer form on behalf of EIGL in favour of Albion which was delivered to Heritage Oil with an instruction that Albion's name be entered into the register of members as the holder of the shares constituting the final tranche, but that transfer has not been registered .

30. Albion therefore applies for the assistance of the Court in the enforcement of its security pursuant to Article 52 of the Security Interests Law ….”

4 The Court noted that on 14 ^th February 2020, Foxton J refused EIGL's application for a stay and granted Albion's application for summary judgment on its claim for the balance of the purchase consideration in the sum of US $13.3 million. An application by EIGL to appeal the decision of Foxton J was refused and his decision is therefore final.

Developments since 30th July 2020

5 The Escrow Agreement, so far as is material, provided that the sum of US$13,333,334 paid to the Respondent's English solicitors Messrs Charles Fussell & Co LLP, was to be held pursuant to the solicitors' undertaking, governed by the law of England and Wales. By that undertaking, Messrs Charles Fussell & Co promised to hold the funds strictly to the joint order of the First Appellant and the Respondent, and not transfer the funds to any person other than on joint instructions of the First Appellant and the First Respondent or pursuant to an order of a court with competent jurisdiction. There having been no agreement between the parties' respective English solicitors, Messrs Charles Fussell & Co applied on 17 ^th June, 2020 as stakeholders for an order from the English Court authorising the transfer of the Escrow monies to the Respondent. The hearing of the application took place on 30 ^th September, 2020, when the following Order was made by Henshaw J:

“UPON CONSIDERING the Claimant's Part 8 claim under CPR, Part 86 (“the Claim”) and accompanying evidence seeking directions under an undertaking dated 22nd January 2019 with respect to US$13,333,334 deposited in escrow with the Claimant and accrued interest in the total sum of US$13,506,971 (the “Fund”)

AND UPON CONSIDERING the [Respondent's] application dated 18th September 2020 for the matter to be dealt with expeditiously and accompanying evidence

AND UPON the Claimant consenting to expedition

AND UPON the [First Appellant] failing to file an acknowledgment of service following service of the claim upon it out of the jurisdiction pursuant to the order of Mr Justice Andrew Baker dated 20 July 2020

AND UPON hearing from Charles Fussell for the Claimant and Harris Bor, counsel for the [Respondent] at a remote hearing on 30 September 2020 .

IT IS ORDERED THAT

• 1. The Claimant is directed to transfer the Fund to the [Respondent] forthwith .

• 2. The [First Appellant] do pay the Claimant's costs in the claim summarily assessed at £11,000 .

• 3. The [First Appellant] do pay the [Respondent's] costs in the claim to be assessed if not agreed.”

6 The amount paid into the Escrow account represented the balance of the purchase price then alleged to be due to the Respondent under the SPA. Since the date of the payment into escrow, the Respondent has asserted other liabilities due to it by the First Appellant – prejudgment interest of US$954,424, and post judgment interest of US$509,626. By letter dated 2 ^nd October, 2020, the Respondent purportedly exercised a right to appropriate the...